Anesthesia Coding Alert

CMS has announced a reduction in the national Physician Fee Schedule conversion factor to $34.5920 for 2003, down from $36.1992 for 2002.

CMS announced the proposed Medicare Part B conversion factors last summer, and the news for anesthesiologists and other providers wasn't good. The final ruling is slightly better than the proposed one but still calls for decreased reimbursement across the board.

The Medicare conversion factor is a designation of what Medicare will pay per unit for any given procedure. This conversion factor is the base dollar amount that Medicare and some other carriers multiply by the relative value units (RVUs) of each procedure to calculate the national payment rate for procedural codes.

This is important to anesthesia practitioners because carriers often reimburse pain management services such as 64400-64484 (diagnostic or therapeutic nerve blocks) or 20552-20553 (trigger-point injections) based on the overall conversion factor.

Because Medicare bases anesthesia reimbursement on procedure units plus time units (instead of only RVUs) for each procedure, anesthesia has its own conversion factor (ACF).

The 2003 national anesthesia factor is $16.0353, down from $16.60 for 2002. This is slightly better than the proposed national average conversion factor of $15.84 but still represents a 3.43 percent decrease in conversion value. The ACF has decreased more than 10 percent over a two-year period (CMS decreased the factor 6.9 percent in 2002).

Although the ACF is set, the actual factor used by anesthesia providers can vary depending on their practice location. The area's cost of living, business expenses, insurance expenses and other variables combine to create these local ACFs.

For example, Northern California is divided into six localities. Each locality has its own ACF, ranging from $17.54 in San Francisco County to $15.91 for the area including Fresno, Monterey, Sacramento, Santa Cruz and other counties. Smaller or less populated states such as Montana or New Hampshire may have the same conversion factor statewide, but it is often still below the national average factor.

CMS also published its final decision regarding increased anesthesia work values as part of the 2003 fee schedule's final ruling.

Federal law requires CMS to review RVUs at least every five years to ensure that they are on par with current services and technology. Not all anesthesia services have a work RVU, so carriers use the conversion factor as its basis of payment. CMS bases the ACF on anesthesia work value and practice expense. Changes in these variables affect the anesthesia conversion factor and payment for all anesthesia services.

CMS divides anesthesia services into five components, assigning each component a value. (The five components are preoperative evaluation, equipment and supply preparation, induction period, postinduction period, and postoperative care and visits.) The agency then adds these five component values to reach the service's total value for reimbursement.

When the RVS Update Committee (RUC) completed and implemented its new review of anesthesia work, the American Society of Anesthesiologists (ASA) proposed new work values for 19 high-volume anesthesia codes. These codes represented general surgery, neurosurgery, orthopedics, cardiac surgery and more. Because anesthesia codes relate to so many procedures, ASAchose a single surgical code to represent each anesthesia code.

The group selected the surgical codes because they were commonly billed and were thought to represent the work intensity involved with the particular anesthesia codes that they crosswalk to, says Scott Groudine, MD, an Albany, N.Y., anesthesiologist. Altogether, the 19 codes represent about 23 percent of Medicare-allowed charges for anesthesia services (or 35 percent of allowable charges, if similar surgeries that cross to the same anesthesia codes are also considered).

The RUC workgroups were concerned about ASA's proposed work intensity values for individual anesthesia components, especially the induction and postinduction periods. After more comments by the ASAand further review of the services, the RUC decided to weight each of the 19 anesthesia codes only by the anesthesia-allowed charges associated with the representative surgical procedure. It increased the physician work portion of the ACF by 2.10 percent, which resulted in a 9.13 percent increase of anesthesia work for these 19 codes. This increase was then spread between all anesthesia codes (instead of only being factored in with the 19 codes surveyed) because all anesthesia codes use the same conversion factor. Consequently, the physician component of the ACF increased 1.0106.

The physician work portion counts as 78 percent of the ACF. And although the RVU workgroup increased this portion, it reduced the practice expense portion of the ACF by 4.04 percent. These changes work together to create the 2003 national ACF of $16.0353.

CMS usually publishes the final reimbursement ruling in November of each year, with an implementation date of the following Jan. 1. But because the final rule wasn't published until December, it will be implemented March 1, 2003. Check resources such as the Federal Register or the ASA's Web site (www.asahq.org) for more information on all the updated conversion factors.